A House of Delegates subcommittee on Tuesday advanced a bill that a group of Southwest Virginia lawmakers said would lower Appalachian Power customers’ bills by “substantially” cutting the utility’s profits and “significantly” reducing its rates.
Among other things, HB 2621 would require state regulators to evaluate Appalachian’s rates more often, prohibit rate increases from taking effect during the winter and create a financing mechanism to shield customers from bearing the costs associated with storm-related repairs and power generation facilities, the legislators said.
“The bottom line is, this bill … will be the most significant rate relief bill for Apco customers in many, many years,” Del. Jason Ballard, R-Giles County, told a House Labor and Commerce subcommittee on Tuesday.
The average Appalachian Power residential bill has risen about $50 in the past three years to approximately $174. In 2007, it was about $66. Lawmakers during this General Assembly session have discussed hearing from constituents whose monthly bills have been hundreds of dollars above average.
The legislation, which heads to the full House Labor and Commerce committee after Tuesday’s 9-0 subcommittee vote, would require Appalachian Power to submit its rates for review every year instead of every two years.
It would prohibit new rate increases until at least March 1, 2026.
It would roll rate adjustment clauses — which Appalachian uses to recover costs associated with transmission, construction and other expenses — into base rates, which Ballard said would simplify customers’ bills.
It would protect customers from “rate shock” by forbidding rate increases during the months of November through February and by requiring Appalachian to consider creating “seasonal winter rates” to avoid high bills during cold weather, he said.
“Many of us are getting these constituent complaints that the bills are astronomical — eight hundred, nine hundred dollars,” he said.
The legislation would require Appalachian to consider alternatives to the utility’s current budget billing plan. The company offers a plan under which a customer’s monthly bill is based on a 12-month average, but each year the customer must catch up on what they owe if their costs increased above what the average monthly payments were able to cover.
The bill would require Appalachian Power to securitize the book value of its two coal plants as well as costs associated with Hurricane Helene and other storms. Securitization is a financing mechanism in which a utility turns assets or expenses into bonds that it sells to investors.
Those financing measures, combined with legislation that Del. Israel O’Quinn, R-Washington County, carried in 2023 allowing Appalachian to securitize fuel costs, would result in an estimated $1.41 billion in profit reduction and a 13% average reduction in rates, according to a news release Tuesday evening from Ballard, O’Quinn and Del. Terry Kilgore, R-Scott County.
“This legislation will quickly put money back into ratepayers’ pockets,” Kilgore said in the news release. “Our goal is to protect our people. This piece of legislation is definitely a start to do just that.”
O’Quinn said in the news release that the bill “will have a meaningful impact because it will actually lower rates for APCo customers in a significant way throughout Southwest Virginia.”
No one from Appalachian Power commented on the bill before the committee Tuesday. Reached for comment on Tuesday evening, a utility spokesperson said he would discuss it with company officials.
The three lawmakers, along with Del. Will Davis, R-Franklin County, were chief co-patrons of a bill that originally focused on the securitization aspect. On Tuesday, the committee combined a new substitute of their bill with HB 1588 from Del. Wren Williams, R-Patrick County, which focused on prohibiting rate increases during winter months.
Del. Irene Shin, D-Fairfax County, came to Tuesday’s committee meeting with her own bill designed to prohibit rate increases during the winter but withdrew it after the committee discussed the larger bill; she called the other lawmakers’ solution “really elegant.”
On Monday, a separate and unrelated bill designed to lower Appalachian Power customers’ bills failed to advance out of a Senate committee. The legislation from Sen. Travis Hackworth, R-Tazewell County, would have let localities aggregate the electricity demand of their residents and businesses to shop around for cheaper rates.
